If There Is Surplus of Loanable Funds, Which of the Following

question 3

Multiple Choice

If there is surplus of loanable funds, which of the following is most likely to happen?

• A)The supply for loanable funds shifts right and the demand shifts left.
• B)The supply for loanable funds shifts left and the demand shifts right.
• C)Neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium.
• D)Neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.

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Definitions:

Capital Account

An account on a nation's balance of payments that records all transactions related to asset changes, including investments and loans.

Liabilities

Financial obligations or debts owed by a business to outsiders, which are required to be settled in the future.

Drawing

A withdrawal made by an owner from the business for personal use.

Revenues

Income generated from normal business operations and includes discounts and deductions for returned merchandise.